Chinese cities offer perks to revive car sales in virus-hit market

Beijing

TWO more Chinese cities that rely heavily on car manufacturing plan to offer incentives to bolster auto sales, which have been hit by the fallout from the spread of the coronavirus.

In the southern city of Guangzhou, where Japanese automakers Toyota, Honda and Nissan all have joint ventures with Chinese partners, the local government plans to reintroduce subsidies to encourage people to buy electric vehicles, it said last week. It did not provide more details. Previous local subsidies were scrapped last year.

Xiangtan, a city of three million people in the southern province of Hunan, will offer people 3,000 yuan (S$598) in cash if they buy a car made locally by Geely, state media Hunan Daily reported on Sunday.

Car sales in China, the world's biggest car market, have been falling for the past two years. In January, they dropped 18.7 per cent from the year before, and the China Association of Automobile Manufacturers (CAAM) expects declines in car production and sales to have been more significant last month due to the coronavirus outbreak.

The China Passenger Car Association (CPCA), another industry body, said China's auto sales fell 89 per cent in the first 23 days of February.

The coronavirus has killed more than 2,800 people in China and forced the temporary shutdown of many factories last month.

Guangzhou's neighbouring city of Foshan, where Volkswagen has a plant with the FAW Group, announced last month that it would offer cash of 2,000 yuan for purchases of new cars and 3,000 yuan for replacement of existing cars. The municipal government said it will also offer subsidies to offset the marketing expenses of auto companies.

CAAM expects China's auto sales to fall by more than 10 per cent in the first half of the year because of the virus, said a senior official. China's commerce ministry said last month that it would study rolling out measures to boost auto sales. REUTERS